A STUDY ON THE FINANCIAL

PERFORMANCE ANALYSIS IN ROOTS

INDUSTRIES

PROJECT REPORT

Submitted by

KEVIN ANTO S
(RegisterNo:710722631052)

In partial fulfillment for the award of the degree of

MASTER OF BUSINESS
ADMINISTRATION DEPARTMENT OF M
ANAGEMENT STUDIES

Dr. N.G.P. INSTITUTE OF

TECHNOLOGY COIMBATORE-641048
(An Autonomous Institution)

ANNA UNIVERSITY: CHENNAI 600025

JUNE 2024
 CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION TO THE STUDY:

Finance is very essential for the smooth running of the business. Finance controls
the policies, activities, and decision of every business. "Finance is that business
activity which is concerned with the organization and conversation of capital funds
in meeting financial needs and overall objectives of a business enterprise. “Finance
is the life-blood of business. The objective of financial analysis is the pinpointing of
strength and weakness of a business undertaking by regrouping and analysing of
figures obtained from financial statement and balance sheet by the tools and
techniques of management accounting. Financial analysis is as the final step of
accounting that result in the presentation of final and the exact data that helps the
business managers, creditors and investors.

In our present-day economics, finance is defined as the provision of money at the

time when it is required. Every enterprise whether big medium or small needs finance
to carry on its operations and to achieve its target. In fact finance is so indispensable
today that it is rightly said that it is the life blood of industry without adequate finance
no enterprise can possible accomplish it objectives Finance is therefore viewed as the
most important area in every enterprise.

Financial performance analysis is the process of identifying the financial

strengths and weaknesses of the firm by properly establishing the relationship
between the items of balance sheet and profit and loss account. It also helps in short-
term and long-term forecasting and growth can be identified with the help of financial
performance analysis. The dictionary meaning of analysis is to resolve or separate a
thing in to its element or components parts for tracing their relation to the things as
whole and to each other. The analysis of financial statement is a process of evaluating
the relationship between the component parts of financial statement to obtain a better
understanding of the firm's position and performance.
FINANCIAL STATEMENTS:
According to the American Institute of Certified Public Accountants,
"Financial statements reflect a combination of recorded facts, accounting
conventions, and personal judgements and the judgements and conventions applied
affect them materially." This statement makes clear that the accounting information
as depicted by the financial statements are influenced by three factors viz., recorded
facts, accounting conventions and personal judgements.

NATURE OF FINANCIAL STATEMENTS

➢ RECORDED FACTS is meant the data contained in statements which have

already recorded in accounting records.

Example: Cash in hand and at bank, cost of fixed assets, amounts du from
customers and due to suppliers of goods are all recorded facts represented
numerically.

➢ Financial statements are prepared by adhering to certain concepts established

ACCOUNTING CONVENTIONS. and
➢ In agreement with the recorded facts and accounting concepts and conventions,
the role of PERSONAL JUDGEMENTS, estimates and opinions, are to be
emphasised especially when two or more alternative procedures are available and
which are equally acceptable

Example: an asset could be depreciated under several methods, and inventory

could be valued under different methods. Under such circumstances. personal
opinion and judgement play an important role as to which of the methods are
in closer conformity with the accounting standards and concepts in a
particular circumstance or case.
OBJECTIVES OF FINANCIAL STATEMENTS:

• The basic purpose of financial statement is to communicate their interested

users, quantitative and objective information are useful in making economic
decisions.
• Financial statements are intended to meet the specialized needs of conscious
creditors and investors.
• Financial statements are prepared to provide reliable information about the
earning of a business enterprise and its ability to operate of profit in future.
The users who are interested in this information are generally the investors,
creditors, suppliers, and employees.
• Financial statements are intended to provide the base for tax assessments.
• Financial statement is prepared in a way a provide information that is useful
in predicting the future charming power of the enterprise.
• Financial statements are prepared to provide reliable information about the
changes in economic resources.
• Financial statements are prepared to provide information about the changes
in net resources of the organization that result from profit directed activities.

USERS OF FINANCIAL INFORMATION

A) EXECUTIVES:

Financial statements provide sufficient accounting information to the

executives and managers to enable them to decide on important issues facing them.
The common issues facing corporate managers to-day, like efficient capital
utilization, maintaining the profitability though cost control, dividend paying
capacity of the company and observing credit standards, can be tackled effectively,
if the executives have a proper understanding of analysis of the financial statement

B) BANKERS:

Bankers take precautions before advancing loans to their constituents. Every

banker, before sanctioning credit, wishes to be assured the borrower's ability to repay
the loans when they become due; to ascertain the company's ability to pay interest
charges on loans and their respective due dates. Therefore, they scrutinize and study
the financial statements in depth and analyse them to ascertain the borrower's
liquidity, solvency, profitability of his business and his financial strength.

C) TRADE CREDITORS:

Credit facilities mass distributors of goods produced but a manufacture or a

wholesalers would not provide credit facilities indiscreetly to everyone. Before
opening an account of the trader concerned, the manufacturer and wholesaler studies
the financial statements of the trader, supplemented by various trade and bank
references. to ascertain his creditworthiness. This information could be obtained from
the financial statement.

D) SHAREHOLDERS AND PROSPECTIVE INVESTORS

Shareholders, who have permanent interest in the life and operations of the
company, are ever desirous of knowing about their company's year to shareholders
are particularly interested in the future of the company. The financial statements
provide the share-holders all the information they require. What is said for the
shareholders holds equally good for the prospective investors
 Every management aims to utilize its finds in a best possible and profitable
way. So, this subject is acquiring a universal applicability. It is indispensable in any
organization as helps in: Financial planning and successful promotion of an
enterprise. Acquisition of funds as and when required at the minimum possible Proper
use and allocation of funds, Taking sound financial decisions; Improving the
profitability through financial controls; Increasing the wealth of the investors and the
nation; and Promoting and mobilizing individual and corporate savings Cost so
financial performance in every company is very important and we can get more
knowledge about company reputation whether company is suffering profit or loss.

The study is made to evaluate the financial position, the operational results as
well as financial progress of a business concern. It explains the ways in which ratio
analysis can be of assistance in long-rang planning, budgeting, and asset management
to strengthen financial performance and help avoid financial difficulties.
1.2INDUSTRY PROFILE:

The automobile industry is a term that refers to the collection of companies and
organizations that are involved in the design, development and production, marketing
and selling of motor vehicles, such as cars, trucks, buses, motorcycles, and other
vehicles. The automobile industry is one of the largest and most important economic
sectors in the world, as it generates a lot of revenue, employment, and innovation.
The automobile industry also has a significant impact on the environment, society,
and culture, as it affects the mobility, transportation, and lifestyle of people around
the world.

The automobile industry has a long and complex history that dates back to the
19th century, when the first vehicles powered by steam engines, electric motors, and
internal combustion engines were invented. Since then, the automobile industry has
undergone many changes and developments, such as mass production, assembly
lines, standardization, globalization, diversification, regulation, competition, and
digitalization. The automobile industry is constantly evolving and adapting to the
changing needs and preferences of customers, as well as the challenges and
opportunities posed by new technologies, markets, regulations, and environmental
issues.

Automobile industry the business of producing and selling self-powered vehicles,

including passenger cars, trucks, farm equipment, and other commercial vehicles. By
allowing consumers to commute long distances for work, shopping, and
entertainment, the auto industry has encouraged the development of an extensive
road system, made possible the growth of suburbs and shopping centres around major
cities, and played a key role in the growth of ancillary industries, such as the oil and
travel businesses. The auto industry has become one of the largest purchasers of
many key industrial products, such as steel. The large number of people the industry
employs have made it a key determinant of economic growth.
Some of the main aspects of the automobile industry include:
The manufacturing of vehicles and their components, such as engines, bodies,
transmissions, brakes, tires, batteries, etc. This involves various processes such as
design, engineering, testing, quality control, assembly, etc. The manufacturing of
vehicles can be done by different types of companies, such as original equipment
manufacturers (OEMs), contract manufacturers (CMs), or joint ventures (JVs).
The wholesaling and retailing of vehicles and their parts and accessories. This
involves various activities such as distribution, marketing, sales, after-sales service,
financing, leasing, etc. The wholesaling and retailing of vehicles can be done by
different types of entities, such as dealerships, franchises, independent retailers,
online platforms, etc.
The maintenance and repair of vehicles and their parts and accessories. This
involves various services such as inspection, diagnosis, replacement, tuning-up etc.
The maintenance and repair of vehicles can be done by different types of providers
such as Authorized Service Centres (ASCs), Independent Garages (IGs), or Do-It-
Yourself (DIY) enthusiasts
The Indian Automobile Market is reasonably concentrated, with the top five
players having most of the market share in all the segments. The major players in the
passenger car segment include Maruti Suzuki India Limited (Suzuki Motor
Corporation), Tata Motors Limited, Hyundai Motor Company, Mahindra and
Mahindra limited, and Honda Motor Company.

The two-wheeler market is also concentrated, with major players occupying

the majority share of the market. The key players in the two-wheeler market include
Hero Moto Corp Limited, Honda Motorcycle & Scooter India Pvt. Ltd. (Honda
Motor Company), TVS Motor Company, Bajaj Auto Limited, and Royal Enfield
(Eicher Motors Limited)

India is a well-recognized Automobile manufacturing hub worldwide because

of its low-cost production. Cheap labour, easy availability and low cost of raw
materials, and a weak currency are the factors driving the manufacturing Industry.
India is the 4th largest producer of Automobiles in the world, with an average annual
production of more than 4 million motor vehicles.
 The automobile sector accounts for 7.1% of India's GDP and 49 % of
manufacturing GDP. Hence, the automobile sector in India is a significant driver of
macroeconomic growth and technological advancement. So, the government is
focused on increasing the share of the automobile industry by introducing various
norms and schemes.
By 2023, the Indian government expects the vehicle sector to receive USD 8-
10 billion in domestic and foreign investment. For instance, the Prime Minister
introduced the Make in India program in 2022 as part of a broader set of nation-
building efforts. Make in India was designed as a timely solution to a crisis to
transform India into a global design and manufacturing hub.
As a result, many manufacturers are investing in new manufacturing plans
and existing plants to cater to the increasing demand for the production of vehicles
in the country. Like in July 2022, Maruti Suzuki India stated that it would invest INR
18,000 crore (USD 2.42 billion) in a new production facility in Haryana, with an
annual manufacturing capacity of 7.5-10 lakh vehicles.
Additionally, in 2023, the Government of India introduced a new vehicle
scrappage policy, where the key objective was to identify and scrap unfit automobiles
from the road. This is done to reduce the emission of more greenhouse gases from
the older vehicles and make way for the new vehicle compliant with BS6 (Bharat
Stage 6 - similar to Euro6) emission norms.
When scrapping an old vehicle, vehicle owners may be eligible for tax
savings as an incentive. As a result, the recycling business will generate more cash.
Compared to older automobiles, the new vehicles will be safer, aiding the overall
automobile market in India.
India's Automobile Market was valued at USD 100 billion in 2021 and is
expected to reach USD 160 billion in 2027, registering a CAGR of 8.1% over the
forecast period (2022-2027)
1.3 COMPANY PROFILE

ROOTS INDUSTRIES INDIA PRIVATE LIMITED (Formerly known as

Roots Industries India Limited)
Roots Industries India Ltd. is a leading manufacturer of HORNS in India and
the 11th largest Horn Manufacturing Company in the world. Headquartered in
Coimbatore - India, ROOTS has been a dominant player in the manufacture of Horns
and other products like Castings and Industrial Cleaning Machines. Since its
establishment in 1970, ROOTS has had a vision and commitment to produce and
deliver quality products adhering to International Standards.

Roots Industries India Limited was the first to start American Auto Service
(1970). Roots India Limited is head quartered at Coimbatore, South India. The first
company to introduce servo brakes for light motor vehicles. Roots have been a
dominant player in the manufacture of horns and other products like Castings and
Industrial Cleaning Machines. The company, promoted by Mr.K. Ramasamy,
Chairman & Managing Director diversified to manufacture high frequency wind.
With a strong innovative base and commitment to quality, Roots Industries India
Limited has occupied a key position in both international and domestic market as
suppliers to original equipment Markets and after-market. The turnover of Roots
Industries India Limited is about 70 crores per annum. There are 1000 employees
working in the industry.

With a strong innovative base and commitment to Quality, Roots Industries

India Limited has occupied a key position in both international and domestic market
as suppliers to leading OEMs and after-market. Similar to products, Roots has
leading edge over competitors on strong quality system base. Now, RIL is the first
Indian Company and first horn manufacturing company in the world to get ISO/TS
16949 certification based on effective implementation of QS 9000 and VDA 6.1
system requirement earlier. RIL has entered into technical collaboration with Robert
Bosch, SA to further enhance the technical competence.
 Roots' vision is to become a world-class company manufacturing world-class
product, excelling in human relation. Roots Industries India Ltd as ISO9001:2000
firm and the parent company manufacture electric horns currently holding 60% of
the Indian Market Share.

They are suppliers to leading automobile manufacturers such as Volkswagen,

Toyota, Mercedes – Benz, BMW, Skoda, Navistar, Harley Davidson, Tata Motors,
etc., are also the exclusive suppliers of the special type horns to defence. Their export
market covers above 40 countries, which include United States, Japan, Germany,
Russia, China, Italy, and Africa, now the Roots has expended and concentrated on
industrial cleaning machines. Roots is a leading Original Equipment supplier to
major vehicle manufacturers like Mercedes Benz, Mitsubishi, Mahindra, Toyota,
TELCO, Rover, Pal Peugeot, etc. This has strengthened the research & Development
activities and increased Roots technical competence to international standards.

ROOTS MULTICLEAN LIMITED

Roots Multiclean Ltd based in Coimbatore, a Southern city in India known
for its textile and light engineering products, is joint venture Roots Industries Limited
with Hako Werke GMBH & Co. Germany is one of the largest manufacturers of
cleaning equipment under license from Hako since 1994, within the short span of 10
year it has become India’s largest manufacturers of floor cleaning equipment,
manufacturing manually operated and powered suction, Sweepers, Scrubber Driers
and the state of the art Mopping System. The group comprises of server important
manufacturing units with the state-of-the-art CAD/CAM/EDP/quality assurance
centers with advanced equipment's.
ROOTS FAMILY

“Think like the customer and Act like the Owner”, Simplicity is the key
to efficiency”- Mr. K. Ramasamy.

Figure No: 1.3.1 Roots Company Logo

Roots Groups promoted by Mr.K. Ramasamy, A Master Degree holder in

Automobile Engineering from Lincoln Technical Institute, USA, has its corporate
office at Coimbatore in South India extending the philosophy of quality to all spheres
of its activity in the market leader in India for flagship product automobile horns.
Roots single minded pursuit of enhancing the quality of life has led to many others
diversification. Roots today is a multi-faced corporate entity with interests in
automobile accessories cleaning equipment, castings, precision tools, hi-tech
engineering services, healthcare & education.
1) Roots Industries India Limited
2) Roots Auto Products Private Limited
3) Roots Multiclean Limited
4) Roots Cast Private Limited14
5) Roots Precision Products
6) Roots Digital Engineering Services Private Limited
7) Roots Brake System Private Limited
8) Roots Polycraft
9) RK Nature Care Hospital
10) Satchidananda Jothi Nikethan Matric Higher Secondary School
11) Roots Metrology Laboratory
12) Roots industries Malaysia SDN. BHD.
MISSION
RIL Mission is to exceed customer’s expectations by offerings best services
and products for best quality at most competitive price and to achieve significant
continual improvement through reduction in all forms of waste and optimum use of
all type of resources under safe working environment.

VISION
RIL will stand technologically ahead of others to deliver world-class
innovative products useful to their customers. they will rather lose their business than
their customer satisfactions. It is their aim that the customer should get the best value
for their money. Every member of the company will have decent living standards.
They care deeply for their families, environment, and society. They promise to pay
back in full measure to the society by way of selfless and unstinted service.

CORPORATE OBJECTIVES
Initiate and implement long-term growth strategies that are focused on
holistic development of products, services and organizational goals Ensure all
strategic initiatives reflect positively on all stakeholders involved Identify key sectors
for new growth initiatives.
 Company Name Roots Industries India Private Limited.

Nature Of Business Exporter And Manufacturer

CIN No U02520TZ1990PLC002987

Year Of Establishment 27 December 1990

Total Number of Employees 1001 TO 2000 People

Legal Status of Firm Private Limited Company

Address RKG Industrial Estate Ganapathy

Coimbatore Tamil Nadu 641006 IN

Turn Over Income RS. 100 - 500 CRORE

Email Id [email protected]

GST No 33AABCR0314E1Z6

Website https://www.rootsindia.com/

Table No: 1.3.1 Company Profile

1.4 OBJECTIVES OF THE STUDY

Some of the major objectives of the Study are given below:

❖ To study the financial performance of Roots Industries.

❖ To analyze the profitability and liquidity of the Roots Industries.

❖ To know the financial strength and weakness of the Roots Industries.

❖ To find out the various financial ratios related to Roots Industries.

1.5 SCOPE OF THE STUDY:

The scope of the Study on The Financial Performance Analysis at Roots

Industries;

❖ The Scope of the Study Covers the Financial Performance of Roots

Industries.
❖ Financial performance covers the aspects like profitability, leverage,
liquidity, activity, and profitability of Roots Industries.
❖ The Scope is Limited to Collecting Financial Data Published in the
Annual Report of the Company.
❖ The study further compares the financial statement to know the relative
financial position of the company.
❖ Using the Ratio Analysis, Companies Past, Present and Future
Performance can be analysed.
1.7. LIMITATIONS OF THE STUDY:

To know the extent to which the study is reliable it is necessary to note the
limitations under which the study has been completed. The following important
limitations have been noted while conducting the present study.
❖ The main source of information is annual reports. They represent financial
information/position on particular date. What happened between such two
dates cannot easily be presumed or predicated.
❖ The annual reports mostly contain quantitative and financial information and
as regards to qualitative aspect of financial performance.
❖ The financial performance covering a large period say 20 years or 30 years
can give a much clear picture of management practices of financial
performance. Our study covering a period of 5 years can touch only a part of
the problem.
❖ The end result of the study is relevant best for Roots Industries India Private
Limited.
 CHAPTER-2

REVIEW OF LITERATURE

Pritesh C. Panchal, Mukesh B. Tagariya (2016) have examined “A STUDY ON

FINANCIAL PERFORMANCE USING RATIO ANALYSIS OF HINDALCO
ALUMINIUM COMPANY LTD”. The study was based on secondary data from
records, reports, and profile of the organization. The ratio analysis is the process of
identifying the financial soundness and cost effectiveness of the firm establishing
relationship between the items of balance sheet and profit and loss a/c. The present
study has thrown major concentration in ratio analysis from the 5 years balance sheet
and profit and loss a/c.

Rohit Bansal (2014) have examined “A Comparative Financial Study: Evidence

from Selected Indian Retail Companies” Fast Moving Consumer Goods (FMCG)
industry plays an important role in economic development of a country. The FMCG
system of India is featured by a large group of FMCG companies, serving many kinds
of consumer and durables goods for the people. The Hindustan Unilever Ltd.
Popularly known as HUL or erstwhile as HLL is one of the leading FMCG Company
in India. Hindustan Unilever Limited (HUL) is India's largest fast moving consumer
goods company with a heritage of over 80 years in India and touches the lives of two
out of three Indians.

Dr. R. Mayilsamy, Mr. S. Pradeep (2021) have examined “A STUDY ON

FINANCIAL PERFORMANCE OF ULTRA TECH CEMENT LTD” Cement
industry is one of the most advanced industries in the country. It makes an important
contribution to the development of factory-based industries, to the construction
industry and even to the development of agriculture. In this study the technique like
Ratio Analysis is used to find out profitability. Cement industry in India” the primary
objectives of the study were to analyze region-wise and state-wise inflows and
outflows of cement in order to forecast the production demand and installed capacity.
In the study it is forecasted that demand would exceed production. To examine the
financial strength of Indian cement industry with the sample companies under
consideration. To analyse the competitive strength of sample companies under the
study on the basis of the data collected from company’s published sources.

Mr. P. Kanagaraj, MS. A. Anusuia (2021) have examined “A STUDY ON

FINANCIAL PERFROMANCE OF ADITYA BIRLA GROUP” Financial analysis
can be undertaken by the management of the firm, or by parties outside the firms,
owners, trade creditors, lenders, investors, labour unions, analysts, and others. The
study used 6 years of Aditya Birla Group secondary data and main objectives is to
find out the profitability, liquidity, and overall performance of the Aditya Birla group.
The various tools like current ratio, cash position ratio, expense ratio and other
performance ratios were used for the study. The suggestion reveals the profit of the
company need to raised through increasing productivity and decreasing expense.
Finally, the study attempts to provide an insight into financial soundness of the
company.

Dr.M. Ganesan (2020) have examined “A STUDY ON FINANCIAL

PERFORMANCE ANALYSIS OF ULTRA TECH CEMENT LTD - AN ANNUAL
GROWTH ANALYSIS A STUDY ON FINANCIAL PERFORMANCE
ANALYSIS OF ULTRA TECH CEMENT LTD - AN ANNUAL GROWTH
ANALYSIS” The global cyclical upswing since mid - 2016 strengthened during the
year. Among the advanced economies, notably Germany, Japan, Korea and the
United States, growth in the third quarter of 2017 was higher than projected. Key
emerging markets and developing economies like Brazil, China and South Africa
also posted impressive growth. Global trade was significantly higher, supported by a
good flow of financial, particularly among advanced economies and increased Asian
manufacturing output. The stronger momentum experienced in 2017 is expected to
carry into 2018 and 2019, with global growth rising to 3.9% for both years. The
International Monetary Fund (IMF) remained optimistic of India’s potential and
retained GDP growth forecast for the country at 6.7% in 2017 and 7.4% in 2018.

Dr. Pramod Kumar Patjoshi (2016) have examined “A COMPARATIVE STUDY

ON FINANCIAL PERFORMANCE OF HINDLCO AND NALCO” In present
modest environment, assessing the financial performance is decisive for corporations
in manufacturing sector. The analysis of financial performance reproduces the
financial position as well as profitability of the corporation, the level of the
competitiveness in the identical sector, and detailed information about the cost and
profit hubs within the corporation. Managers, investors, and creditors can put on the
different accounting evidence provided by financial analysis in their tactical planning
and investment decisions. Therefore, this study involves the financial performance
of two major companies i.e. HINDALCO and NALCO aluminium manufacturing
companies in India. To analyse financial performance of HINDALCO and NALCO
data has been self-possessed from the data published from different website for the
ten years from 2005- 06 to 2014-15.

Dr. S.K. Khatik (2015) have examined “CASH MANAGEMENT OF PUBLIC

COMPANY -A CASE STUDY OF HINDALCO INDUSTRIES LTD.” Cash
Management refers to the management of cash and bank balances and also includes
short term deposits. In other way it can be said that it has includes cash and near to
cash assets. The purpose of cash management is use to maintained the short-term
liquidity position of the business. If the company do not have a sufficient amount of
cash than the liquidity of the company may be interrupted. In this research paper we
will examine the firm’s liquidity with focus on payment/ pay-out routines, liquidity
management, short- term financing and the connection between accounts receivable
and payables.

Mr. Taj baba & Dr. Sadat Shareef (2019) have examined “FINANCIAL
DISTRESS ANALYSIS OF MARUTI SUZUKI BY USING ALTMAN Z SCORE
MODEL” Corporations are Looking Growth by year by year but some
Disappointment of this objective. Envisaging of Bankruptcy is acute task, in the early
phase of identification of probability of creditworthiness may avoid troubles in the
near future & may shelter the firm from Insolvency situation. The insolvency of
organizations can be founded by using Altman’s Z-Score Model. This study
employed Edward Altman financial soundness prediction model to assess financial
condition to understand the probability of Bankruptcy of Maruti Suzuki limited for
past 5 years, which is listed in Indian Stock Exchange. The secondary data for
valuation were acquired from financial Statement of company

Dr. Rishikaysh Kaakandikar (2019) have examined “To Study the Financial
Position of Maruti Suzuki India Ltd Using Ratio Analysis” The auto enterprise has
long gone swiftly now a day. The traits and adjustments are made up very quickly
because the generations’ gone pass. And its miles just because of the new technology
associated with vehicle enterprise. There are numerous numbers of vehicle
businesses. Maruti Suzuki India restricted is the only and it's miles the maximum
main company of the Indian vehicle industry. The exam has been directed for to
realize the all monetary presentation of unique enterprise

R. Sathishkumar, N. Jayanthi (2022) have examined “PRACTICE OF

LIQUIDITY AND SOLVENCY: DOES IT WORK IN HINDALCO INDUSTRIES
LIMITED” The standard theory has developed in the area of accounting and finance
to strengthen and support the current practice in the world but it is questionable
whether it is most suitable to the current situation and also it should be justifiable in
the practical aspects too. Therefore, the present study is undertaken to examine the
applicability of standard theory norms of liquidity and solvency by taking Hindalco
Industries Limited as a case. The experiment applied the standard ratios in the last 15
years of the company’s financial data from 2009 to 2021 in order to determine the
practice of standards developed in the field of liquidity and solvency

Dr. U. Arumugam S. Pradeepkumar (2020) have examined “STUDY ON

FINANCIAL PERFORMANCE OF SELECT TYRE INDUSTRY IN INDIA” The
execution is a general term applied to a section or to every one of the behaviours of
exercises of an association over some stretch of time frequently regarding past or
anticipated cost effectiveness, the executive’s duty or responsibility or something like
that. Hence, the introduction, however the nature of results accomplished alludes to
the presentation execution is utilized to demonstrate association's prosperity,
conditions, and compliance Money related execution to the demonstration of
performing monetary movement. In more extensive sense, money related execution
alludes to how much budgetary targets being or has been cultivated. It is the way
toward estimating the consequences of an association's arrangements and tasks in
money related terms. It is utilized to gauge association's general money related well-
being over a given time frame and can likewise be utilized to look at comparative
firms over a similar industry or to analyse enterprises or divisions in collection.

Dr. R. Mayilsamy (2021) have examined “A STUDY ON FINANCIAL

PERFORMANCE OF BHARAT PETROLEUM CORPORATION LIMITED”
Financial performance is a subjective measure of how well a firm can use assets from
its primary mode of business and generate revenues. The study used five years of
Oracle financial services software limited company data and the main objective of
the study is to estimate the profitability of the business concern. The tools used for
the study are liquidity ratio and profitability ratio. The suggestion given is that the
company’s day to-day cash management need to be improved and it has to improve
the efficiency at converting sales into actual profit to enjoy the best profit.
Bhavesh A. Prabhakar (2019) have examined “A STUDY ON FINANCIAL
PERFORMANCE OF SELECTED CENTRAL PUBLIC SECTOR ENTERPRISES
(CPSES) IN INDIA” As per the Department of Public Enterprises (DPE) Survey
2018- 19, there were total 348 CPSEs as on 31st March,2019 out of which 249 were
operational. Remaining 86 CPSEs were under construction and 13 CPSEs were under
closure or liquidation. Total Paid up Capital in all CPSES as on 31.3.2019 Stood at
Rs. 2,75,697 Crore Registering a Growth of 8.55%. Financial Investment in all
CPSES Stood at rs.16,40,628 Crore Recording a Growth of 14.65%. The secondary
data is used for the research. It has been collected from the company’s annual report
and balance sheet and other sources.

Dr. Abha Jain Nagawat (2016) have examined “A COMPARATIVE STUDY ON

LIQUIDITY POSITION OF MARUTI SUZUKI AND TATA MOTORS” The
concept of liquidity within a business is vital for the understanding of financial
management as it is the basic criteria of testing the short-term liquidity position of
the enterprise. In this study, liquidity is considered to be short-term liquidity which
is the capability of the organization to repay its current liabilities out of its current
assets. Liquidity ratios measure the ability to meet its current obligations when they
fall due for payment.

Hasmukh Chaudhary (2018) have examined “AN ANALYSIS OF WORKING

CAPITAL MANAGEMENT OF SELECTED STEEL AND CEMENT
COMPANIES OF INDIA” Since, working capital is an important factor for any
company. It plays a role as a life book in financial matter. This paper attempts to
study the trends of working capital positions of the five selected companies belongs
to cement Industry and five selected companies belongs to steel Industry. To conduct
analysis, ratio analysis technique used as accounting technique and different
statistical.

Dr. Ashok Kumar Rath (2015) have examined “A STUDY ON FINANCIAL

STATEMENT ANALYSIS OF TATA STEEL ODISHA PROJECT, KALINGA
NAGAR” India is one of the developing nations of the World. Globalization provides
ample of opportunity to the Companies to expand overseas and enrich India with high
Quality and World Class products by implementing state-of –art-technology. The
Steel Giants of India are namely, Arcellor, Mitttal, Tata Steel Ltd. & Steel Authority
of India presenting India on the Global front. Tata steel was expanding its production
capacity in India and has some Greenfield Steel Projects under implementation,
including one at the Kalinga Nagar Industrial Complex at Duburi in Jaipur district.
This project report was an effort to suggest the best financing option for the project
expenditure of Rs.21200 Cr and to identify its financial strength and weaknesses with
the help of various financial statement analysis tools and techniques. (Rath., 2016)
For the success of the present study data was collected mainly from secondary
sources like annual reports of Tata Steel from the FY 2010-11 to FY 2014-15,
newsletter, magazines, and journals of the company. Management of Import of
Equipment involves Chain of Integrated task. And for smooth Process flow
documentation of Import of Equipment is required, so that the agencies involved has
clarity of responsibility.
Dr. M. H. DASHTI (2014) have examined “ANALYSIS AND INTERPRETATION
OF FINANCIAL STATEMENT OF COMPANY” The financial statements of a
business, person, or other entity are formal records and financial activities both in the
short- and long-term business or provide an overview of the financial condition of
the individual. They had brief as a condition of the company and the operating results
of sat Pictures. Company officials and investors to assess the overall situation and
operating results of the company mainly by financial statements are used as a
management tool. Analysis and interpretation of financial statements helped liquidity
situation, long term refinement Efficiency, financial viability and profitability of a
firm in determining ratio analysis shows that the company is improving or
deteriorating over the past few years. In addition, all firms compared to effectively
the various aspects of this can be done with it customers who reduce the risk or a firm
should invest in order to decide the maximum profit can be help Does. Mining
industries are capital-intensive; that is why a lot of money invested in it before
investing in such companies so a carefully studied its financial condition and
eligibility. Unfortunately, very limited work analysis and interpretation of financial
statements for Indian mining companies had been on a quest to analyse and five coal
and non-coal mining companies to explain financial statements had been carried out
in this project. The study revealed that the company perform financial statement
analysis the benefit the investors for future investment in the company. It is also
observed that a current position of all company was good the profitability and growth
for the company were positive.

Dr. Ayad Shaker Sultan (2014) have examined “FINANCIAL STATEMENTS

ANALYSIS - MEASUREMENT OF PERFORMANCE AND PROFITABILITY:
APPLIED STUDY OF BAGHDAD SOFT-DRINK INDUSTRY” This paper
attempted to analyse the financial statements and measure the performance in terms
of assets utilization, and profitability. In detail the research methodology used for the
study that had focused on the past and present performance of Baghdad Sort-drink
Industry. The study purely relies on secondary data, which were collected for a period
of ten years (2004 to September 2013) from the audited annual reports of the
company and maintained and made available by several organizations viz., Baghdad
Sort-drink Industry, and Iraq’s Stock Exchange for the purpose of effective periodical
analysis. In order to know the performance of the industry that was evaluated with
the help of five financial ratios. The paper used accounting ratios and financial report
analysis, namely, profitability ratios, which might affect the financial performance
of the firm. Profit Margin (PM), Return on Assets (ROA), Return on Equity (ROE),
Capital turnover ratio and Expense ratio. All these analyses were done to the case of
Baghdad Soft-Drinks Company. This study reveals that financial strengths and
weaknesses of the Baghdad Soft-drink Industry over the connected period there were
gray areas took place in June 2007 to June 2009, which resulted in decline of all the
concerned profitability ratios and subsequently the performance of Baghdad Soft-
Drinks Industry, during the two years. In conclusion, ROE is the most comprehensive
measure of profitability of a firm; it considers the operating and investing decisions
made as well as the financing and tax related decisions.

K.T. Srinivas (2012) have examined “AN ANALYSIS OF FINANCIAL

STATEMENTS OF KARNATAKA POWER CORPORATION LIMITED,
BANGALORE” The Karnataka Power Corporation Limited (KPCL) is mainly
involved in the generation of power and is the sole administrator for the power
generation in the state. It was formed on 20th July 1970 as a sister concern to
Karnataka Electricity Board (KEB) in order to eradicate the power famine of the
state. The study was conducted to analyse the financial performance of Karnataka
Power Corporation Limited with the help of various ratios. From the present study it
was found that company financial performance was seeing to be sound, because the
company trying to increase its production and also net profit.
Deepika S (2017) have examined “A STUDY OF FINANCIAL STATEMENT
ANALYSIS OF OIL AND NATURAL GAS CORPORATION LIMITED” Finance
is considered as life blood of business enterprise. The success and survival of any
organization depends upon how efficiently it is able to raise funds as and when
needed and their proper utilization. The object of the present study was to know the
profitability and solvency and the future value of the business concern during the
period of five years from 2012-2016. For this purpose, to fulfil the objectives Ratio
Analysis and Correlation has been used for the calculation of the company. Finally,
the suggestions were offered to control the fluctuating in price changes.

K. Keerthi and S. Eswari (2020) have examined “A STUDY ON FINANCIAL

PERFORMANCE USING RATIO ANALYSIS OF KUMBAKONAM CENTRAL
CO-OPERATIVE BANK” The main objective of this paper is to analyse the overall
financial position of the bank using ratio analysis. It shows whether the firm is
improving or worsening in past years. The secondary data is used for the entire study
i.e. the last five years annual reports of KCCB. Ratio analysis provides a basis for
both intra-firm as well as inter-firm comparisons. The pictorial representations are
used for better understanding. Ratios are useful tool for various stakeholders like
management, financiers, shareholders, and creditors etc. Various types of ratios
include liquidity ratios, profitability ratios, solvency ratios are analysed in this study.
This paper tells that not only about the financial position of the firm but also helps to
identify the problems and offer suggestions to improve its performance.

Sakan Solanki, Dr. M. Madhuri Devi, Dr. Syed Saleem Aquil (2023) have
examined “A STUDY ON FINANCIAL PERFORMANCE USING RATIO
ANALYSIS OF STEEL AUTHORITY OF INDIA” India economic development is
majorly depended on the growth of Indian steel sector. Indian economy growth
projected according to prediction by the World steel Association the growth rate is
6.7% in 2023. The Indian steel industry contribute around 2.5% to National GDP.
steel has been a crucial ingredient in driving economic development since the
beginning of industrial revolution in 18th century. Steel is a key element that used in
building house, manufacturing cars, utensils, engineering industries like power
generation, fertilizer machine, petrochemicals etc now India has taken second
position replacing Japan with regard to second largest producer of Crude Steel
manufacturing around 100 million tons every year. Steel sector directly employs 6
lakhs whereas 20 lakhs indirectly. The research paper aims to examine the financial
performance of Steel Authority of India. The data have been tabulated, analysed by
using different statistical tools like mean, standard deviation, coefficient of variance
and ratios. The study is Based on secondary data and study period is from financial
year 2017-18 to 2021- 2022 this paper analyses the financial strength Steel Authority
of India of 5 years and also try to improve recommendation to improve
manufacturing unit faced a lot of stress during Covid but as soon as the Lockdown
opened Indian economic started reviving very fast.

Dr. A. MUTHUSAMY & S. KARTHIKA (2019) have examined “FINANCIAL

PERFORMANCE OF SELECTED CEMENT COMPANIES IN INDIA” India is the
second major manufacturer of cement in the world. No marvel, India's cement
production is an essential part of its economy, given that employment to more than a
million people, directly and indirectly. India has a lot of options for development in
the transportation and infrastructure sector and the cement sector is expected to
largely benefit from it. The objectives of the study are to find the short-term financial
performance of the sample cement companies and analyse the profitability condition
of the chosen cement companies. It is based on the convenience sampling method.
The information used in this study is secondary in nature. Profit earning is measured
necessary for endurance of the industry. The Profitability ratios show the capability
of the select companies. The financial positions of the selected cement companies are
reasonable. But both the companies must improve their short-term solvency position.
The profitability ratio of two cement companies is satisfactory and the two selected
companies short term liquidity position is not satisfactory because the selected
company’s current ratio and Quick ratio level is below one and two selected
companies are quickly maintained their inventory, investment, and Debtors. Ultra
Tech Cement Limited correlation between the Investment Turnover Ratio and
Inventory Turnover Ratio is 1which is very strongest. The correlation between
Debtor Turnover Ratio and the Net Profit Ratio is -0.912 which is very weak. Shree
cement Limited correlation between the Investment Turnover Ratio and Debtor
Turnover Ratio is 1 is very strong. The Investment Turnover Ratio and the Debt
Equity Ratio is – 0.720 which is very weak. The competence of a compact depends
ahead the functioning operations of the anxiety.
Dr. G. Bhavani (2018) have examined “A COMPARISON OF FINANCIAL
PERFORMANCE BASED ON RATIO ANALYSIS (WITH SPECIAL
REFERENCE TO ITC LIMITED AND HUL LIMITED)” In our present-day
economy, finance is defined as the provision of money at the time when it is required.
Every enterprise, whether big, medium, or small, needs finance to carry its operations
and to achieve its targets. In fact, finance is so indispensable today that it is rightly
said to be lifeblood of an enterprise. A ratio is a mathematical relationship between
two items expressed in a quantitative form. In this empirical paper highlights the
objective of the study, scope of the study, limitation of the study, review of literature,
data analysis and interpretation, finding, suggestion and conclusion regarding
comparative of financial performance based on ratio analysis of ITC and HUL ltd.

NILUTPAL NARAYAN KONWAR (2023) have examined “Financial

Performance Analysis of Reliance Industries Ltd. – An Indian Conglomerate MNC.”
The term “Financial Performance Analysis” is used to describe the process of
identifying financial strength and weakness of a company with the help of its
Financial Statements i.e. Income Statement (Profit and Loss Account) and Position
Statement (Balance Sheet). It helps a company not only to predict future profits
efficiently but also to take necessary corrective measures to overcome weaknesses.
Reliance Industries Limited (RIL) is one the largest private sector companies in India
that has a strong existence in the rapidly expanding telecommunication and retail
sectors. In this paper, the financial performance analysis of RIL has been done for a
five years period, ranging from the financial year 2017- 18 to 2021-2022. The study
has been done with the objective of evaluating the financial position of the company
along with identifying and analyzing the financial changes and the future results with
the help of ratio and trend analysis. The data has been collected from annual reports,
company’s website, published articles and other reliable sources. The study depicts
that the company has weaknesses in various areas and improvement in those areas
will help the company to achieve its perfect ratios. The study has some limitations
also relating to primary sources data, tools of data analysis, periodicity of study etc.
H. Divyaa, S. Panneerselvam (2023) have examined “FINANCIAL
PERFORMANCE ANALYSIS OF TCS COMPANY WITH REFERENCE TO IT
SECTOR IN INDIA.” This study deals with financial performance analysis of TCS
Company with reference to IT sector in India. The research mainly concentrates and
analysis on the profitability, Turnover & solvency position of TCS Company. The
ten years annual report of the companies was taken from websites (2011 to 2020).
The secondary data was obtained through balance sheet, financial statements,
journals and articles etc. The analytical tools used for this study are ratio analysis and
Future trend analysis it helps to know the financial position of the company. The
result of the study is based on the performance in financial fluctuations and
interpretations of TCS Company with reference to IT sector in India.

Mr. Rithin. K. Harish, Mr. M.A. Prasad (2023) have examined “A STUDY ON
FINANCIAL PERFORMANCE OF WIPRO PRIVATE LTD.” Wipro Limited is an
Indian multinational corporation that provides information technology, consulting,
and business process services. It was founded in 1945 by M. H. Hasham Premji and
is headquartered in Bangalore, India. Wipro operates in various industries, including
banking and financial services, healthcare, energy and utilities, retail, manufacturing,
telecommunications, and more. The company offers a wide range of services,
including application development and maintenance, infrastructure management,
business process outsourcing, consulting, digital transformation, and cybersecurity.
This study is conducted to evaluate the financial performance of Wipro limited to
obtain a better understanding of the company's position and performance. The
efficient performance of the firm depends on the well planning of the investment and
distribution A financial analysis reveals strength and weakness of the company by
properly establishing the relationship between the items of balance sheet and profit
and loss account.
S. SUBALAKSHMI, S. GRAHALAKSHMI AND M. MANIKANDAN (2018)
have examined “FINANCIAL RATIO ANALYSIS OF STATE BANK OF INDIA.”
SBI is the India’s largest commercial bank in terms of assets, deposits, and
employees. SBI is the preferred banker for most of public sector corporations. It
occupies a unique place in the Indian money market as it commands more than one
third of India’s bank resources. Public has enormous faith in State bank of India
because of its dedicated services. This study aims at analyzing the Financial Ratio
analysis of State Bank of India. The main objective for commercial bank is to
maximize the value of profit. To do so, banks concentrate on their financial
performance analysis and attempt to structure their portfolios in order to maximize
their return. The most popular tool/technique for analyzing the Financial Statement
of Bank is Ratio Analysis. Ratio analysis enables the management of banks to
identify the causes of the changes in their advances, income, deposits, expenditure,
profits, and profitability over the period of time and thus helps in pinpointing the
direction of action required for increasing the deposits, income, advances and
reducing the expenditure and for altering the profitability prospects of the banks in
future. Therefore, the study was undertaken to analyse financial status of public
sector bank especially to SBI (State Bank of India).

RENU HOODA & KULDIP SINGH CHIKARA (2018) have examined

“FINANCIAL PERFORMANCE ANALYSIS OF INDIAN OIL CORPORATION
LIMITED” Energy is at the core of any nation’s development plan and India as a
developing nation reserved the commanding heights of the economy for state
enterprises keeping basic and capital-intensive goods sectors under its purview.
Indian Oil Corporation Limited (IOCL), India’s flagship national oil company and
downstream petroleum major performance is studied through this paper by using
trends and ratio analysis. The study is purely based on secondary data which were
collected from various sources such as annual reports of IOCL, National Account
Statistics, CMIE Prowess, etc., which were analysed with the help of statistical tools
like mean, standard deviation, CAGR and ratio analysis. The study revealed that the
company’s total assets exhibit the growth of 13.13 per cent followed by income
(10.62 per cent), equity (9.27), total liabilities (7.77), turnover (5.89) and retained
earnings (0.24). Company’s liquidity position in term of current ratio and quick ratio
was found to be less than industry and the same were consistently falling while
leverage position indicates that company finance its projects from equity fund rather
than from borrowed funds. Company’s fixed assets turnover ratio also showed the
downward trend which is a matter of concern and profitability of company in terms
of ROA, ROE and ROC showed wide fluctuation over the period of the study owning
the India’s dependence on import of crude oil to fulfil the requirement of growing
and expanding economy and making its oil marketing companies vulnerable to global
events.

Ashok Kumar (2020) have examined “A COMPARATIVE STUDY OF

FINANCIAL PERFORMANCE OF TATA STEEL LTD. AND JSPL” This research
paper is conducted purely based on secondary data obtained through website of the
specified private industry. By using the ratio analysis tool, we can analyse the
performance of both the steel industries in India and we can easily find out the
strength and weakness of the companies and their position in the market. Different
ratios are used in this study and particularly those which are related to the financial
statement for this purpose balance sheet of year 2014-2019 of both the industries are
used and from then ratios are calculated so according to which we can easily compare
the company performance and tell which company grows faster and whose position
is better than the other one. After comparing the financial position, it is clear that
position of TATA Steel Ltd. is much better than the Jindal Steel & Power Ltd. (JSPL).
 CHAPTER 3

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research
problem. The systematic method used in this study is collecting data and at
analyzing the data to find a solution to the search problem

3.1 RESEARCH DESIGN

Research design is a detailed blueprint used to guide the research study

towards its objectives. The research design for the study the descriptive and analytical
in nature. The function of researcher is to ensure that the required data collected are
accurate and economical also Analytical research technique was adopted in the
project. Generally, analytical techniques are designed to analyse something and it
collects data for a definite and certain purpose. The project study mainly focuses on
the critical assessment of the financial position of Roots Industries India Private
Limited, and deals with financial statement analysis.

PERIOD OF THE STUDY

The data collected for this research work is limited to Five years that is from
2018-2019 to 2022-2023.

SOURCE OF DATA
The study is about financial performance so it deals with secondary data. The
required data were collected from the published annual report of the Roots Industries
India Private Limited. The further information needed for the study was also gathered
through the various books, journals.
3.2 METHODS OF DATA COLLECTION

For completion of my study only secondary data has been used. The main
sources are annual reports. Besides for framing conceptual framework, various books
and published material in standard books and newspapers, Journals and websites has
been used.
3.2 TOOLS USED FOR ANALYSIS

Several tools and techniques were used for analysis and interpretation of
financial statement of the company. They are;

Ratio Analysis:
❖ Liquidity Ratio
• Current Ratio
• Liquid Ratio
• Absolute Liquid Ratio

❖ Profitability Ratio
• Net Profit Ratio
• Return On Asset Ratio
• Return On Investment Ratio

❖ Solvency Ratio
• Proprietary Ratio
• Fixed Assets to Proprietary Funds
• Current Assets to Fixed Assets

❖ Activity Ratio
• Fixed Assets Turnover Ratio
• Total Assets Turnover Ratio
• Inventory Turnover Ratio
 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIO

Liquidity ratio measure the firm’s ability to pay off current dues i.e.., repayable
within a year. Liquidity ratios are otherwise called as short-term solvency ratios.

CURRENT RATIO

Current Ratio is used to assess the firm ability to meet its current liabilities.
The relationship of current assets to current liabilities is known as current ratio.

Formula

Current Assets
Current Ratio = Current Liabilities
 Table No: 4.1.1
Table showing Current Ratio of the Roots Industries
(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Current Asset Current Liabilities Current Ratio

2019 14370.30 7277.23 1.974694

2020 14726.90 7044.8 2.090464

2021 18320.25 9961.8 1.83905

2022 23586.29 12506.27 1.885957

2023 23952.19 11696.73 2.047768

LIQUID RATIO
Liquid ratio is used to assess the firm short-term liquidity. The
relationship of liquid assets to current liabilities is known as liquid ratio. It is
otherwise called as quick ratio or acid test ratio.

Formula
Liquid Assets
Liquid Ratio = Current Liabilities
 Table No: 4.1.2
Table showing Liquid Ratio of the Roots Industries
(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Liquid Asset Current Liabilities Liquid Ratio

2019 8911.53 7277.23 1.2245772

2020 8875.74 7044.8 1.2598995

2021 11055.32 9961.8 1.1097713

2022 11657.66 12506.27 0.9321452

2023 12420.56 11696.73 1.0618831

ABSOLUTE LIQUID RATIO
It is a modified form of liquid ratio. The relationship of absolute liquid assets
to liquid liabilities is known as absolute liquid ratio. This ratio is called as super
quick ratio

Formula

Absolute Liquid Ratio = Absolute Liquid Assets

Current Liabilities
 Table No: 4.1.3
Table showing Absolute Liquid Ratio of the Roots Industries
(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Absolute Liquid Current Liabilities Absolute Liquid

Asset Ratio

2019 134.47 7277.23 0.0184782

2020 321.85 7044.8 0.0456862

2021 2915.97 9961.8 0.2927152

2022 2510.83 12506.27 0.2007657

2023 1303.28 11696.73 0.1114226

PROFITABILITY RATIO

Efficiency of a business is measured by profitability. Profitability ratio measure

the profit earning capacity of the business concern.

NET PROFIT RATIO

This ratio determines the overall efficiency of the business. The relationship
of net profit to sales is known as net profit ratio.

Formula

Net Profit
Net Profit Ratio = Sales
𝑋 100
 Table No: 4.1.4
Table showing Net Profit Ratio of the Roots Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Net Profit Sales Net Profit Ratio

2019 1731.9 27891.83 6.21

2020 1629.72 26867.03 6.07

2021 2486.96 32591.33 7.63

2022 2382.98 38922.62 6.12

2023 2556.04 45412.25 5.63

RETURN ON ASSET RATIO

Return on assets is a profitability ratio that provides how much profit a

company is able to generate from its assets. In other words, return on assets
(ROA) measures how efficient a company’s management is in generating
earnings from their economic resources or assets on their balance sheet.

Formula

Net Profit
Return on Asset Ratio = 𝑋 100
Total Asset
 Table No: 4.1.4
Table showing Return on Asset Ratio of the Roots Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Return on Asset

Net Profit Total Asset
Ratio

2019 1731.9 22340.12 7.75

2020 1629.72 23401.31 6.96

2021 2486.96 28403.96 8.76

2022 2382.98 34188.78 6.97

2023 2556.04 36313.27 7.04

RETURN ON INVESTMENT RATIO

Return on capital employee compares income with capital

financed in the company. It is similar to return on asset, but it takes into
interpretation sources of financing. It is used to show the value the trade gain from
its assets and liabilities.

Formula

Net Profit Ratio

Return On Capital Employed = 𝑋 100
Shareholders fund
 Table No: 4.1.4
Table showing Return on Investment Ratio of the Roots
Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Shareholders Fund Return on

Net Profit
Investment Ratio

2019 1731.9 14003.52 12.37

2020 1629.72 15257.23 10.68

2021 2486.96 17696.67 14.05

2022 2382.98 20025.71 11.90

2023 2556.04 22510.43 11.35

 SOLVENCY RATIO

Solvency refers to the firm ability to meets its long-term indebtedness.

Solvency ratio studies the firm’s ability to meet its long-term obligation.

PROPRIETARY RATIO

Proprietary Ratio shows the relationship between proprietors or

shareholders fund and total tangible assets.

Formula

Shareholders fund
Proprietary Ratio =
Total Tangible Asset
 Table No: 4.1.4
Table showing Proprietary Ratio of the Roots Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Shareholders Fund Total Tangible Assets Proprietary Ratio

2019 14003.52 6680.16 2.10

2020 15257.23 6780.86 2.25

2021 17696.67 9368.62 1.89

2022 20025.71 9209.26 2.17

2023 22510.43 11226.36 2.01

 RATIO OF FIXED ASSETS TO PROPRIETORY FUNDS

This ratio is calculated to find out the ratio of fixed assets to proprietor’s
funds with the assumption of fixed assets and the shareholder’s fund.

Formula

Fixed Asset
Ratio of Fixed Assets to Proprietary Funds =
Shareholders Fund
 Table No: 4.1.4
Table showing Ratio of Fixed Assets to Proprietary Funds of the
Roots Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Shareholders Fund Ratio of Fixed

Fixed Asset Assets to
Proprietary Funds

2019 6680.16 14003.52 0.48

2020 6780.86 15257.23 0.44

2021 9368.62 17696.67 0.53

2022 9209.26 20025.71 0.46

2023 11226.36 22510.43 0.50

RATIO OF CURRENT ASSETS TO FIXED ASSETS

Ratio Of Current Assets to Fixed Assets ratio is

calculated to find out the ratio of current assets to fixed assets with the assumption
of current assets and fixed assets.

Formula

Fixed Asset
Ratio of Current Assets to Fixed Assets =
Current Asset
 Table No: 4.1.4
Table showing Ratio of Current Assets to Fixed Assets of the
Roots Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Fixed Assets Current Assets Ratio Of Current Assets to

Fixed Assets

2019 6680.16 14370.30 0.46

2020 6780.86 14726.90 0.46

2021 9368.62 18320.25 0.51

2022 9209.26 23586.29 0.39

2023 11226.36 23952.19 0.47

ACTIVITY RATIO

Activity ratios indicate the performance of the business. The performance

of the company is judged with its sales or cost of goods sold. These ratios are thus
referred to as turnover ratios.

FIXED ASSETS TURNOVER RATIO

Fixed Assets Turnover Ratio shows how best the fixed assets are being
utilized in the business concern. The relationship between sales and fixed assets
is known as fixed assets turnover ratio.

Formula

Net Sales
Fixed Assets Turnover Ratio =
Average Fixed Asset
 Table No: 4.1.4
Table showing Fixed Assets Turnover Ratio of the Roots
Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Net Sales Average fixed Fixed Assets Turnover Ratio

Assets

2019 27891.83 2226.72 12.53

2020 26867.03 2260.287 11.89

2021 32591.33 3122.873 10.44

2022 38922.62 3069.753 12.68

2023 45412.25 3742.12 12.14

TOTAL ASSETS TURNOVER RATIO

Total assets turnover ratio, compare the sales of the company to its assets.
The ratio measures the ability of an organization to efficiency produce sales.

Formula

Net Sales
Total Assets Turnover Ratio =
Average Total Asset
 Table No: 4.1.4
Table showing Total Assets Turnover Ratio of the Roots
Industries

(Rs in lakhs)
Years Net Sales Average Total Total Assets Turnover Ratio
Assets

2019 27891.83 2234.01 12.49

2020 26867.03 2340.13 11.48

2021 32591.33 2840.40 11.47

2022 38922.62 3418.88 11.38

2023 45412.25 3631.33 12.51

(Source: Annual Reports of the Roots Industries)

INVENTORY TURNOVER RATIO

Inventory turnover ratio, also known as the stock turnover ratio, is an efficiency
ratio that measures how efficiency inventory is managed. The inventory turnover ratio
formula is equal to the cost of goods sold divided by total or average inventory to show
how many times inventory is “turned” or sold during a period. The ratio can be used to
determine if there are excessive inventory levels compared to sales.

Formula

Net Sales
Inventory Turnover Ratio =
Average Inventory
 Table No: 4.1.4
Table showing Inventory Turnover Ratio of the Roots Industries

(Rs in lakhs)
(Source: Annual Reports of the Roots Industries)

Years Net Sales Average Inventory Inventory Turnover Ratio

2019 27891.83 2215.94 12.59

2020 26867.03 2299.51 11.68

2021 32591.33 2827.99 11.52

2022 38922.62 4453.28 8.74

2023 45412.25 4741.11 9.58